ECONOMIC SECURITY RISK FACTOR 5. EVENTS ASSOCIATED WITH THE BEGINNING AND ENDING OF A POVERTY EPISODE

Events that trigger the beginning or ending of a poverty episode indicate an increased or decreased likelihood of future dependence.

Table ECON 5a. Percent of First Poverty Episode Beginnings Associated with Specific Events

Note: Events are defined to be neither mutually exclusive nor exhaustive. Work limitation is defined as a self-reported physical or nervous condition that limits the type of work or the amount of work the respondent can do.

Source: Unpublished data from the PSID, 1968 - 1992.

• Second or higher order births were more often associated with the beginning of first poverty episodes than first births. This was especially true for spells beginning between 1986 and 1991, during which time 18 percent of first poverty episodes were associated with second or higher level births.
• The percentages of first poverty spell beginnings associated with decreases in mothers' work hours rose dramatically over time, from 13 percent in the earliest period to 29 percent in the most recent period.
• The percentages of first poverty episodes associated with the householder acquiring a work limitation increased over time to nearly one-quarter of all first spells beginning between 1986 and 1991.

Table ECON 5b. Percent of First Poverty Episode Endings Associated with Specific Events

Note: Events are defined to be neither mutually exclusive nor exhaustive. Work limitation is defined as a self-reported physical or nervous condition that limits the type of work or the amount of work the respondent can do.

Source: Unpublished data from the PSID, 1968 - 1992.

• While the percentages of poverty episode endings associated with increases in mothers' work hours remained relatively stable across the three time periods (around 21 percent), the percentage of poverty spell endings associated with marriage or cohabitation decreased somewhat in the more recent time period (from 14 to 12 percent).
• The percentages of poverty spell endings associated with increases in transfer income remained relatively stable over the three time periods (around 4 to 5 percent).
• The percentages of spell endings associated with a householder no longer reporting a work limitation increased between the first two time periods and remained stable in the last time period.

ECONOMIC SECURITY RISK FACTOR 6. INTERGENERATIONAL POVERTY

The extent to which parental poverty is associated with poverty of their children as adults illustrates a significant risk to current and future dependence.

• Whereas only 10 percent of white children who were usually poor in childhood were usually poor in adulthood, 26 percent of black children who were usually poor in childhood were also usually poor in adulthood.
• Similarly, 10 percent of white children who were never poor as children experienced some poverty as adults. In contrast, 26 percent of black children who were never poor as children experienced some poverty as adults.

Table ECON 6. Poverty Transitions Between Childhood and Adulthood

Note: "Usually Poor as Child and Usually Poor as Adult" measures the percent of children who were poor 51-100 percent of childhood who were also poor 51-100 percent of adulthood. "Never Poor as Child and Ever Poor as Adult" measures the percent of children who were never poor during childhood who were ever poor during adulthood. The table reads 9.8 percent of children who were usually poor during childhood (51-100 percent) were themselves usually poor during their observed adult years. Numbers are calculated for adults age 27 to 35 years in the 1988 PSID.

Source: Corcoran, M., "Rags to Rags: Poverty and Mobility in the United States," Annual Review of Sociology, 21:237-6, 1995.

ECONOMIC SECURITY RISK FACTOR 7. PRE-TRANSFER AND POST-TRANSFER POVERTY RATES

Trends in the pre- and post-transfer rates of poverty show the anti-poverty effectiveness of social security and the major means-tested assistance program benefits.

Note: The pre-transfer rate measures poverty in terms of cash income (only) before all transfers. The official rate measures it in terms of cash income plus social security and means-tested cash transfers. The post-transfer rate measures poverty after adding not only social security and means-tested cash transfers but also the market value of food and housing benefits plus taxes (including the refundable EITC as well as Federal payroll and income taxes); it does not include the fungible value of Medicare and Medicaid.

• In all years reported, the pre-transfer poverty rate for families with related children under age 18 was much higher than both the official poverty rate and the post-transfer poverty rate.
• Table ECON 7 shows that the total reduction in the poverty rate from transfers declined from 6 percent in 1979 to 4 percent in 1983. By 1993, the total reduction in the poverty rate again reached 6 percent and increased to 7 percent in 1994 and 1995.

Table ECON 7. Antipoverty Effectiveness of Cash and Near-Cash Transfers for All Persons in Families with Related Children Under 18, Selected Fiscal Years

• Table ECON 7 shows that a substantial percent of the poor population was removed from poverty by transfers in all years shown. After declining from 37 percent in 1979 to 19 percent in 1983, the percent of persons removed from poverty due to transfers consistently increased in the years reported. In 1995, 35 percent of all poor persons were removed from poverty due to transfers.

• Table ECON 7 shows that the percent of the poor population removed from poverty due to food and housing benefits is much larger in all reported years than the percent removed due to other transfers. In 1995, 13 percent of the poor population was removed from poverty due to food and housing benefits.
• Table ECON 7 also shows that whereas the EITC and Federal payroll and income taxes did not remove any poor individuals from poverty in 1979, 1983 and 1989, the trend reversed in 1993. By 1995, the EITC and Federal payroll and income taxes removed 7 percent of the poor population from poverty.